Introduction to

Construction Law

Jennie Wild and Emma Healiss

27 November 2020
INTRODUCTION

➢ “Building contracts are pregnant with disputes”

(Linden Gardens Trust Ltd v Lenesta Sludge Disposal Ltd [1994] 1 AC 85, per Ld Browne-
Wilkinson at p105E)

➢ “I shall seek to dispel the idea that construction cases are

somehow different and apart from the general law and that
they only concern Scott Schedules, lists of defects and delay
claims”
(Lord Dyson, Keating Lecture 2015, “The Contribution of Construction Cases to the
Development of the Common Law”)

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INTRODUCTION

➢ Contract, tort, restitution ➢ Standard forms:

• JCT
➢ Key legislation: • NEC
• Housing Grants, Construction and • FIDIC
Regeneration Act 1996 • LOGIC, SAJ, NEWBUILDCON, etc
• Defective Premises Act 1972
• Building Act 1984 > Building ➢ Forums:
Regulations • TCC, arbitration, adjudication and
• Procurement -related legislation other forms of ADR
• Arbitration Act 1996
➢ People:
• Workers, engineers, project managers,
commercial teams, insurers/funders,
employers, solicitors/advisers, experts
(delay, technical, quantum etc)

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Important statutes:
The Housing Grants etc. Act 1996

“The intention of Parliament in enacting the Act was plain. It was

to introduce a speedy mechanism for settling disputes in
construction contracts on a provisional interim basis, and
requiring the decisions of adjudicators to be enforced, pending
the final determination of disputes by arbitration, litigation or
agreement...”

Dyson J (as he then was), Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93

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Important statutes:
The Housing Grants etc. Act 1996

Statutory adjudication
• Where the parties have expressly incorporated the provisions of the
Scheme in the contract; or
• The contract falls within the definition of a “construction contract” to
which the HGCRA applies and:
 The express contractual provisions do not contain the eight
requirements set out in sections 108(1)-(4); or

 There are no express contractual provisions.

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Important statutes:
The Housing Grants etc. Act 1996

➢ Adjudication – Part I of the Scheme

• Provisions which add to the basic requirements of section 108 HGCRA
are permissible; however, provisions that alter or omit those basic
requirements are not.
• Section 108(5): if the contract does not comply, "the adjudication
provisions of the Scheme for Construction Contracts apply".
• Even if the non-compliance with is partial, the incorporation of Part I of
the Scheme will be ‘lock, stock and barrel’.
Yuanda (UK) Co Ltd v WW Gear Construction Ltd [2010] EWHC 720 (TCC) at [61] and Coulson on
Construction Adjudication, 4th edition at [4.11]-[4.12]).

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Important statutes:
The Housing Grants etc. Act 1996

➢ Payment
• Contractors have a statutory right to interim payments unless the
duration of the works is less than 45 days: Section 109
• There must be an adequate mechanism for determining what payments
are due under the contract and when and, in respect of each payment,
a final date for payment: Section 110
• No conditional payments: Section 110(1A)-(1D)
• Provisions for (1) payer’s notice, (2) payee’s notice and (3) payless
notice: Sections 110A, 110B and 111.

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Important statutes:
The Housing Grants etc. Act 1996

➢ Payment – Part II of the Scheme

• Unlike the adjudication provisions at Part I, the payment provisions at
Part II are not incorporated wholesale in the event of non-compliance.
• Section 110(3) makes plain that that the provisions at Part II are
incorporated only "if or to the extent that" the contract does not
contain the relevant provisions.
• Confirmed to be settled law in Bennett (Construction Ltd) v CIMC MBS
Ltd [2019] EWCA Civ 1515 at [54].

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Important statutes:
Defective Premises Act 1972

• Imposes duties upon a person taking on work for or in connection with

the provision of a dwelling to see that the work which he takes on is
done in a workmanlike manner or, as the case may be, professional
manner, with proper materials and so that as regards that work the
dwelling will be fit for habitation when completed: section 1(1).
• The duties are additional to any duty otherwise owed.
• “Dwelling” is not defined, although presumably includes all buildings
used or capable of being used as a residence.

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Important statutes:
Defective Premises Act 1972

• The question of whether a person has taken on work within the

meaning of the Act is to be assessed according to whether they do work
which positively contributes to the creation of the dwelling.
• Thus ordinarily it will include the main contractor and any professional
person, such as an architect, engineer or quantity surveyor and any sub-
contractor specifically employed on or in connection with the provision
of the dwelling and those supervising the construction of the works: see
Lessees and Management Co of Herons Court v Heronslea Ltd [2019]
EWCA Civ 1423.

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Contract:
Key cases/interesting principles

➢ Formation: Courtney and Fairbairn v Tolani Brothers

(Hotels) Ltd [1975] 1 WLR 297

“If the law does not recognise a contract to enter into a contract … it
seems to me it cannot recognise a contract to negotiate. The reason is
because it is too uncertain to have any binding force. No court could
estimate the damages because no one can tell whether the negotiations
would be successful or would fall through: or if successful, what the result
would be.”

(Lord Denning at p301H)

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Contract:
Key cases/interesting principles

➢ Implied terms: Young & Marten v McManus Childs

[1969] 1 AC 454
“There are, in my view, good reasons for implying such a warranty if it is not
excluded by the terms of the contract. If the contractor's employer suffers loss by
reason of the emergence of the latent defect, he will generally have no redress if he
cannot recover damages from the contractor. But, if he can recover damages, the
contractor will generally not have to bear the loss: he will have bought the
defective material from a seller who will be liable under section 14 (2) of the Sale of
Goods Act, 1893, because the material was not of merchantable quality. And, if
that seller had in turn bought from someone else, there will again be liability, so
that there will be a chain of liability from the employer who suffers the damage
back to the author of the defect.”
(Lord Reid at p466)

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Contract:
Key cases/interesting principles

➢ Damages: Ruxley Electronics v Forsyth [1995] 3 WLR

118

“Damages are designed to compensate for an established loss and not to

provide a gratuitous benefit to the aggrieved party from which it follows
that the reasonableness of an award of damages is to be linked directly to
the loss sustained. If it is unreasonable in a particular case to award the
cost of reinstatement it must be because the loss sustained does not
extend to the need to reinstate.”

(Lord Jauncey at p357E)

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Tort:
Key cases/interesting principles

➢ Scope of duty of care

• A builder who does no more than build pursuant to a “normal” construction
contract does not owe a duty of care to avoid causing economic loss: D & F
Estates v Church Commissioners [1989] AC 177 HL and Robinson v PE Jones
[2011] EWCA Civ 9.

• A builder may owe such a duty where it has assumed responsibility for designs:
Burgess v Lejonvarn (2017) 171 Con LR 188 at [111] and Broster v Galliard
Docklands Ltd [2011] EWHC 1722 (TCC) at [21].

• A building control inspector does not owe a duty of care to purchasers of

houses to safeguard them against economic loss: Murphy v Brentwood DC
[1991] 1 A.C. 398 HL at [480] and Lessees and Management Co of Herons Court
v Heronslea Ltd [2019] EWCA Civ 1423.

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Tort:
Key cases/interesting principles
➢ Duty to speak/warn
• There is usually no duty to speak or warn. Any such duty normally arises under
an express or implied contract term.

• What about where there is a clear defect or something that is obviously

dangerous?

 The duty to warn will often arise where there is an obvious and significant
danger either to life and limb or property.

 It can arise when a careful professional ought to have known of such danger,
having regard to all the facts and circumstances.

 Unlikely to be liable merely because there was a possibility in the future of

some danger.

Goldswain and Hale v Beltec Ltd [2015] EWHC 556 (TCC) at [47]

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 Jennie Wild and Emma Healiss
jwild@keatingchambers.com
ehealiss@keatingchambers.com

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